John Armstrong: Labour's new Gospel - take up thy bed and work

Steve Maharey has delivered something of a wake-up call to a sizeable chunk of the more than 118,000 people on a sickness or invalid's benefit: start thinking work or we will start thinking it for you.

Overshadowed by yesterday's unveiling of the new "single core benefit" was Government notice of a fundamental shift in how the benefit system will treat the disabled and those suffering serious ill-health.

Gone is a presumption that those people cannot work.

The Social Development Minister is saying that Work and Income staff are now going to concentrate first and foremost on getting those beneficiaries back into the workforce in some capacity.

This new policy thrust, which for now seems to be restricted to firmly prodding people rather than wielding the stick of sanctions at them, is being driven by three factors.

First, New Zealand now has a serious labour shortage - yet one in seven working-age households has no one at work.

Second, Labour has to confront worrying official forecasts that the numbers on sickness and invalid's benefits are set to further explode to more than 137,000 within three years, with the welfare bill for them jumping by more than $400 million in just four years.

Third, while Don Brash has gone quiet on welfare reform after his proposals for slashing the numbers on the domestic purposes benefit backfired, he is bound to return to the subject and flag tough measures to cut eligibility for the sickness and invalid's benefits during the election campaign, if not before.

It looked too much of a happy coincidence for Labour that, after years of gestation, Mr Maharey's overhaul of the benefit structure should - surprise, surprise - be suddenly ready for unveiling just as National was pushing for reform.

And, as it turns out, his revamp was not quite ready for unveiling. A fair bit of the detail of how Mr Maharey's new benefit will actually operate - like the rate at which it will be paid - was noticeably absent from yesterday's announcement.

The news that the Cabinet still has to make a host of such decisions consequently made it more difficult for him to argue convincingly that the timing had nothing to do with Dr Brash's Orewa speech last month.

National's offensive on so-called welfare dependency - Mr Maharey declared deadpan - was a "non-issue". The Cabinet had been working on the benefit restructuring before Christmas - long before Dr Brash chose welfare as his topic for Orewa.

Despite Mr Maharey's protests of innocence, however, Labour knows it is vulnerable on welfare, especially the mushrooming of sickness and invalid's benefits.

While it is not waving the sort of stick at beneficiaries that Dr Brash did at Orewa, Labour's approach is increasingly seeing the introduction of incentives, positive and negative, to get those people to take jobs.

However, by forgoing Brash-style sanctions, the Government cannot promise the spectacular cuts in beneficiary numbers that National's leader has set as his target.

Labour is "conservatively" estimating saving of up to $70 million a year across all benefits from its latest moves - less than 2 per cent of the annual bill for those benefits.

That means Labour will still be accused by Dr Brash of being "soft".

However, yesterday's announcement is clearly designed to show that Labour is increasingly less so, even if Mr Maharey is constrained by his party's ethos of helping the poor from saying so explicitly.